M/S. BARNALA STEEL INDUSTRIES LTD.,MUZAFFARNAGAR vs. ACIT, MUZAFFARNAGAR

In all these appeals, the assessee is aggrieved against the levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961 as under:-

We have heard the submissions of both the sides and have perused the material placed before us. We find that penalty u/s ITA-6781, 6782 & 6784/D/2013 2 271(1)(c) of the Act has been levied on the disallowance of small amounts. In assessment year 2002-03, penalty has been levied for disallowance of expenses of `62,697/- on the only ground that the expenditure was not actually paid. In assessment year 2004-05, the Assessing Officer disallowed part of depreciation amounting to `46,805/-. In assessment year 2007-08, penalty has been levied on account of disallowance of scholarship of `1,00,000/- paid by the assessee. In our opinion, merely because some expenditure is disallowed or depreciation is partly allowed, it cannot be a ground of levy of penalty for concealment of income. There is no allegation that the assessee concealed any fact or the details furnished by the assessee were found to be incorrect, erroneous or false. In view of the above, we, respectfully following the decision of Hon’ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. – (2010) 322 ITR 158 (SC), cancel the penalties for all the three years under consideration.